October 25, 2020

The EC points out that Europe has weapons to defend itself against threats from the US due to the Google tax


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The European Commission (EC) will not give in to the “warnings” from the United States of retaliation if the project of a fee for continental digital services that affects the big technology goes ahead. “The answer should not be unilateralism, but if there are unilateral measures, Europe has the weapons to respond and defend itself“, Replied the head of the trade unit for Latin America of the European Commission, Matthias Jørgensen, during the conference” International trade and its role in solving the Covid-19 crisis “, which included the participation of the European Commission and the Secretary of State for Trade, Xiana Méndez.

“This idea is not born out of nowhere, the digital services tax was a long-term work of an OECD working group, in which was the United States, and the EU», The Secretary of State recalled, when addressing that Spain is going to be one of the first countries to apply this tax at the end of the year. Because of this, the United States sent a letter a few weeks ago to France, Italy, Spain and the United Kingdom in which it warned them that if they approved the digital tax projects they had, there would be more tariffs. The main technologies are North American (Google, Facebook, Apple and Amazon), so the US sees the tax as a pulse of Europe.

Now the field of negotiation with the Donald Trump Administration is opened. “What we are going to do is dialogue, as we have been doing, with the American authorities to explain what this tax consists of and why it does not discriminate by the origin of the companies and that it is applied without distinction of nationality, “said Xiana Méndez, given the possibility that the United States may apply tariffs to the Spanish countryside.

Multilateralism reform

“This theme exemplifies very well why the rules need to be modernized. We cannot live with some rules, those of the World Trade Organization (WTO) that were adopted in the early 90’s and intellectually were made in the late 80’s. The internet that exists now did not exist. Now we have a multiplication of businesses crossing borders ”, Jørgensen reflected.

Xiana Méndez herself has called for reform of the WTO before the European Commission’s chief of mission pointed out that “multilateralism is in crisis.” In a time of struggle and “threats” between “the US and Chinese models”, Jørgensen believes that the EU should strengthen its ability to defend its interests independently, but not by resorting to protectionism or in isolation.

How does the EU deal with these threats? “The EU measures against dumping and State aid amount to 121, 16 against State subsidies and aid. Of these, 93 are directed against China and 10 against Russia. I believe that the EU’s defense mechanisms work. Those measures have protected 350,000 European jobs», Detailed the deputy director of the Representation of the European Commission in Spain, Jochen Müller.

A Spanish woman to lead the WTO?

Precisely, in a scenario in which multilateralism is evolving, the Minister of Foreign Affairs, Arancha González Laya, is one of the names that is sounding to lead the WTO. Méndez has valued “the brilliant career” of the Spanish if she finally got the position, although “there is still no consensus candidate” in the European Union.

“It is very important that the EU reaches a united option. We have very good experiences of the last selections of candidates, there was a process of exchange between the members of the European Commission and the member states, “said Jørgensen.

Trade, the engine to get out of the crisis

Both speakers have highlighted the advantages of recent EU trade agreements withSingapore (effective from November 2019) and with Vietnam (effective as of August 2020), and those still pending ratification such as Mexico and Mercosur. Xiana Méndez has advocated trade as an engine to emerge from the recession in the case of our country. “Trade is an important part of our GDP, almost 35% for Spain,” he valued.

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